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Tanzania

IFAD signs agreement for US$90.6 million loan to Tanzania

Rural financial services and markets to get a boost

Rome, 9 March 2011 - A US$90.6 million loan from the International Fund for Agricultural Development (IFAD) to the United Republic of Tanzania will enhance access to rural financial services and markets and promote private-sector development in the country, the United Nations rural poverty agency has announced.

The loan agreement for the Marketing Infrastructure, Value Addition and Rural Finance Support Programme was signed on 25 February in Rome by Mustafa Mkulo, Minister for Finance and Economic Affairs of the United Republic of Tanzania and Kanayo F. Nwanze, President of IFAD. The loan will be extended to the country on highly concessional terms.

In the United Republic of Tanzania, agriculture is recognized as a significant driver for growth. However, its potential is yet to be exploited fully to bring about a significant reduction in rural poverty. Smallholder producers have limited access to financial services, markets and opportunities for value addition.

To address rural finance and marketing issues, the programme will scale up some of the successful activities implemented under two pilot programmes - the Agricultural Marketing Systems Development Programme and the Rural Financial Services Programme, completed in 2009 and 2010 respectively.

The new programme, cofinanced by the African Development Bank (AfDB), the Alliance for a Green Revolution in Africa (AGRA), the Government of the United Republic of Tanzania and the beneficiaries will support the implementation of the agricultural sector development strategy. The strategy envisages a modernized, commercial, highly productive and profitable agricultural sector by 2025.

The programme is expected to enhance the capacity of participating commercial banks for sustained lending to agriculture, and strengthen rural microfinance institutions with improved governance and management systems. The marketing groups obtaining higher revenues from improved access to markets and increased synergies in agricultural marketing and rural finance activities will help improve the livelihoods of poor rural people.

Over 500,000 vulnerable rural households, including smallholder farmers, herders and fishers, small-scale rural entrepreneurs, traders and artisans, grass-roots microfinance institutions, processing and marketing groups, very poor rural women and rural young people, will benefit directly from the programme.

With this new programme, IFAD will have financed 15 programmes and projects in the United Republic of Tanzania for a total investment of US$3,591.8 million benefiting nearly 4 million households.

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Press release No.: IFAD/19/2011

The International Fund for Agricultural Development (IFAD) works with poor rural people to enable them to grow and sell more food, increase their incomes and determine the direction of their own lives. Since 1978, IFAD has invested over US$12.5 billion in grants and low-interest loans to developing countries, empowering more than 370 million people to break out of poverty. IFAD is an international financial institution and a specialized UN agency based in Rome - the UN's food and agricultural hub. It is a unique partnership of 167 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD).